World oil prices rose sharply Tuesday after the International Energy Agency made a smaller-than-expected downward revision to global energy demand growth, analysts said. New York's main contract, light sweet crude for delivery in November, jumped 1.73 dollars to 63.53 dollars per barrel in closing trading.
In London, the price of Brent North Sea crude for November delivery rose 1.30 dollars to close at 60.08 dollars per barrel. "Todays October IEA monthly oil market report must be counted as representing serious damage to the theme of oil 'demand destruction' that has recently helped to drive oil and refined product prices lower," said Barclays Capital analyst Kevin Norrish.
The IEA reduced its forecast for growth of global oil demand this year by 90,000 barrels per day to 1.26 million barrels per day.
Investec analyst Bruce Evers added: "The decline in demand as indicated by the IEA is not as big as some people feared. Some people thought that the revision downwards would be much bigger than that."
Phil Flynn at Alaron Trading, said the report fuelled concerns about "another fourth quarter supply squeeze" at a time when heating oil is in high demand.
Stronger-than-expected economic and corporate news has cast doubt over the notion of slowing demand, he added.
"Today we had a very strong earnings report from Alcoa, a big user of natural gas. So, it doesn't seem that their demand will slow down anytime soon," Flynn said.
"I think that everybody is talking about demand destruction, there is no doubt there has been some but I think is going to be more short term that people think."
The IEA said that while world oil markets were absorbing disruption from recent severe hurricane damage to oil installations, further official action may be needed to compensate for reduced supplies of energy.
Hurricane damage closed off 1.2 million barrels per day of oil production in the US Gulf region in September, the IEA said, adding that the natural disasters had a "substantial" effect on reducing demand.
However in 2006 demand would grow by 1.75 million barrels per day owing to a rebound from "the largely temporary impact of (hurricanes) Katrina and Rita and a recovery in Chinese demand."
Production by Opec rose by 100,000 barrels per day in September to 29.8 million barrels per day owing to increased production by Iraq and Kuwait, the IEA said.
Oil prices rocketed to all-time peaks at the end of August, touching 70.85 dollars in New York and 68.89 dollars in London, on supply concerns as Katrina tore through oil rigs and refineries in the Gulf of Mexico, severely disrupting US energy production.
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